Labor Matters

Wage and Hour Lawsuits Attack the Dairy Industry

Jun 24, 2012

Employment lawsuits are among the fastest-growing areas of litigation. Do you have a plan to demonstrate compliance?

By Anthony P. Raimondo, attorney

Wage and hour litigation is the fastest-growing type of litigation in the U.S., especially in California. While the problem may be more acute in California than in other parts of the United States, dairy producers nationwide have seen a growth in these lawsuits against dairies.

There is only very limited insurance coverage available for dairies, and the cost of defending these cases is very high. As a result, many dairies find themselves in the uncomfortable position of spending money to defend themselves, or settling the case early to control costs. It is critical for dairies to examine their practices in order to avoid becoming a target of this type of lawsuit.

While wage and hour laws can vary greatly from state to state, there are common practices that can create exposure to liability. All dairy producers should consult with a qualified labor attorney in their state to make sure that their practices comply with state and local laws and regulations.

The Fair Labor Standards Act (FLSA) is the federal wage and hour law that applies to almost all businesses in the U.S. While many states have laws that are more favorable to employees than the FLSA, for practical purposes the FLSA sets the floor for wage, hour and recordkeeping requirements. When state laws are more favorable to employees, employers must follow the state law, but at minimum, must follow the federal law. While the FLSA does not regulate matters like meal and rest breaks, it does provide for minimum wage, overtime and recordkeeping requirements.

Under the FLSA, agricultural work is exempt from overtime but not from minimum wage. However, this can be a trap for agricultural employers. For example, traditional dairy work such as milking, feeding and caring for livestock is considered agriculture and is exempt from overtime. But in one case, the court decided that a dairy’s operation processing compost was not agricultural for purposes of the exemption, and the dairy faced liability for unpaid overtime.

While core agricultural functions such as planting, harvest, milking, and care and feeding of livestock are clearly agricultural and are exempt from overtime, many activities associated with agriculture may not be considered agriculture for purposes of the exemption. Dairy employers should consult with agricultural labor counsel to make sure they are properly paying overtime.

Of course, many states have laws that provide overtime for dairy workers. In California, agricultural employees are entitled to overtime after 10 hours of work in a day and on the second consecutive day of work in a single workweek. All dairy producers should be familiar with their state overtime laws, and must be careful to be in compliance.

Many states have detailed wage and hour laws that can lead to exposure to liability. In California, the law regulates recordkeeping, meals and breaks, equipment provided to workers and other items. There is also a comprehensive penalty scheme that makes seemingly minor violations serious financial issues. Every dairy producer should be very careful to comply with all laws and regulations that govern the employment relationship.

There are many common practices in the dairy industry that lead to liability, as follows:

• Recordkeeping: Many dairies do not have time records at all, or do not keep accurate time records. This is a critical mistake that must be avoided. If an employer does not have time records, the employee can claim any number of hours, and the employer will be forced to disprove the employee’s claims, which can be difficult. Some dairies make adjustments to time records to avoid overtime, or to prove that meal periods were taken, and the time records lose credibility because they have been altered. Time records must be complete, and they must be accurate. Functions such as automatic deductions for meal period time must be avoided in order to have an accurate tally of hours worked.

• Daily Rates and Salary Pay: Generally speaking, it is perfectly legal to pay daily rates or salaries to dairy workers, but overtime must be paid when required. In some states, employers can have agreements in place for a salary or daily rate to cover both regular and overtime hours, but such agreements typically have to be in writing. Of course, if hours are not properly recorded, the dairy will not be able to show that the pay is enough to cover minimum wage, and will not be able to show that there is no overtime owed.

• Equipment: In most states, employers must provide all equipment that is necessary for the work. Many dairies do not provide rubber boots, and it is difficult to argue that rubber boots are not necessary to work on a dairy. Discipline can be imposed if a worker loses the boots or fails to take care of them, but most states do not allow the employer to recover the cost of lost or damaged items from an employee’s wages.

• Wage Deductions: Other than deductions that are authorized by law, such as taxes, garnishments and similar items, employees must authorize deductions from their wages in writing. If an employee pays rent for housing, or if the dairy lends the employee money, the dairy can only take payments through a payroll deduction if the deduction is authorized in writing.

• Housing: Housing must be maintained according to applicable state and federal regulations, and employers are almost always required to bear all maintenance costs. In many cases, the value of housing can be credited toward minimum wage, but in many cases a written agreement is required.

• Meal and Rest Breaks: While not all states have laws regulating meal and rest breaks, these are favorite claims in states that have such laws. Employers must understand their obligations, and have a plan in place to demonstrate compliance.

Employment lawsuits continue to be one of the fastest growing areas of litigation in the U.S., and many dairies have been targeted. In most cases, there is no insurance available to cover these claims, which can be financially devastating. It is essential for dairy producers to know the laws in their state, and to have a plan to demonstrate compliance.

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, consult with Anthony Raimondo at McCormick Barstow LLP in Fresno, Calif., at (559) 433-1300.